Among the most frequently asked questions in the sports card industry & hobby, asked by novices, long time collectors, dealers & investors alike is:

"What's IT worth "???

Understandably then, this concept of worth, compared to price, value, book, Beckett, SCD, Tuff Stuff, Sports Card Trader, PCN Reports, & others, is widely debated daily somewhere in the country. Unfortunately, it is also being debated aimlessly, for few in the industry & hobby really understand the complex nature of worth. Each respondent's view of the nature of "worth" being limited to the narrow sphere of influence they themselves have been exposed to. They then pass on inaccurate depictions of the concept of "worth" to the listening parties, who in turn pass those inaccuracies on to other third & fourth parties, in the grass roots chain of "word of mouth" communications.

Webster's dictionary defines the following terms as follows:

Based on the above three definitions, worth & value have a definitional tie in, but price doesn't seem to have any definite link to either worth nor value.

In the business world, where value has many special purpose definitions, the key concept is the term "fair market value" which to draw a universally accepted printed definition, we quote from the Internal Revenue Service Publication 561 …

What are the key clauses from this definition? Fair market value is arguably equal to "worth" and to "value." Fair market value is also equal to "price" … but with THREE REQUIRED CONDITIONS!

The first condition … willing buyer & willing seller. Currently we are in a buyer's market, so clearly virtually every transaction is made to a "willing buyer." But is the seller always a "willing seller"? Think about all those selling dealers who must sell their products to pay their upcoming charge card minimum payments, their house rent, food for their family, or for the next product. Or consider those collectors who are short of cash, and are selling their cards just to raise funds to buy some addition packs or boxes. How about collectors & dealers who are going through divorces, with the spouse or the court mandating forced immediate sales? Or the collector selling his collection merely to pay for his children's education, or some health emergency? It is quite conceivable that the second condition twines in tightly in some of these examples, forcing the seller to sell.

The third condition … both having reasonable knowledge of the relevant facts. In this industry & hobby, this is probably the most disturbing of the conditions. How often do both parties to any sale have reasonable knowledge of the relevant facts? How often do either parties have reasonable knowledge of the relevant facts? How often does the hobby itself have any knowledge of any of the facts?

As disturbing as it is, the industry & hobby is being encouraged to operate solely in the dark ages. For proprietary (business) reasons, licensors AND manufacturers insist they must keep out of the secondary market. They insist it is for self survival reasons that they cannot disclose production numbers of the products they produce and distribute into the marketplace. They insist they are perfectly happy following tradition, and allowing the secondary market to find its own value & price levels, by letting the dealers & collectors set the prices. All efforts to encourage the dissemination of information to the consumers & collectors & front line dealers is rebuffed by & large as a waste of time, insisting that consumers should buy items merely because it is fun. Pay your entertainment dollars, buy $10,000 worth of cards a year, and enjoy the memories (for the cards aren't really worth anything)! Does that sound like the majority of collectors to you? Is it any wonder that hoards of collectors have left the ranks of collectors, and have redirected their expendable dollars to REAL entertainment, whether it be at the ballpark, buying a video game or computer game, buying a figurine, buying Nike Air Jordans, etc. Collecting cards may be "fun" … but other forms of entertainment are even MORE FUN!

Another example of facts. Often the industry & hobby is given "signs" of product facts, seemingly indicating scarcity, maybe in the form of numbering, or in the form of a stated production run, or packaging odds, or stated to be hobby only, or even retail only. Has anyone ever NOT found it to be dismaying when six months later TONS of product are essentially "blown out" through industry liquidators, cable TV programs (HSC, Shop at Home, etc), WalMart's & Sam's & Big Lots, or even direct mail marketing sell offers to consumers? Isn't this an indication that the loyal buyers of manufacturer products when released were NOT given all the facts, and are in fact treated like guinea pigs?

Suffice to say … except in rare cases, it is highly unlikely that fair market value of a card is equivalent to the price paid for such card, especially when purchased at a show, off the internet, through AOL, in collector to collector transactions, and even often when purchased at a hobby shop.

Perhaps, the proper question is … what is a "price guide"? What is the purpose of a "price guide"?

Currently Beckett, SCD, Tuff Stuff, etc all claim to report transactions occurring in the hobby. Therefore they purport to reflect "average last sale prices." However, as discussed above, prices are NOT necessarily a proper measure of "worth." So when the question is asked … "what's it worth"? Isn't it improper to immediately flip to Beckett, or SCD Weekly, or Tuff Stuff, and quote the "prices" listed therein?

Another irony in the current state of the hobby, is with the multitude hordes of products being produced & distributed, front line dealers are having a very difficult time figuring out how to price cards. So what do they do? They turn to the price guides for the answer. WHOA!!!! Something is wrong here! Aren't price guides supposed to reflect "average last sale prices"? Yes! Then … if the front line dealers haven't set prices yet, and are looking to the price guides for help in determining what to price cards at, are price guides now "reporting prices" or "setting or establishing prices"? While all of the price guides would probably argue that they are NOT "setting prices," still it ironic that the objective purpose for SCD Weekly was to be the first price guide out on the street with "prices" on the new products. In fact, that is one of the reasons why many front line dealers carried SCD Weekly, to be the first to see what the new cards were listed at, so that the front line dealers would have a clue on how to price the cards out of the new products. And how does one explain cards listed in a price guide which have yet to be released? If cards haven't been released yet, upon what "last sales prices" are the listed prices a reflection of?

Many have argued that "price guides" should reflect "average last sale prices" or merely "the last sale price" in comparison to stock prices, as listed daily in the Wall Street Journal or any everyday newspaper. Whether or not this method is best for the hobby is debatable. However, how many truly understand what the mechanics are in the stock market, as is utilized by the professional money managers & stock brokerage firms? Let's take a simple look at that environment.

The stock market is comprised of a number of major exchanges throughout the world. Major exchanges include the New York Stock Exchange (NYSE … almost all major companies are listed on here), American, Boston, Philadelphia, Pacific, Tokyo, Hong Kong, Paris, London, and virtually every major financial city in the world. Companies can be listed in as many exchanges as they choose. Few realize you can buy a NYSE stock after hours on a different exchange somewhere else in the world, as long as there is a market maker willing to handle it. In addition, there is the NASDAQ & Over the Counter general marketplaces, generally for smaller capitalization stocks, or stocks of companies who choose to have multiple market makers.

For simplicity sake, we will restrict ourselves to an example on the NYSE. Let's say one wishes to buy 100 shares of XYZ Co. You call your broker to place your order, either at a fixed price, or "at the market." Your broker places your order, it goes into the "trading pit" where it ends up in a "pile" of orders at the market maker for XYZ Co. stock. The market maker matches up the offers to buy & sell, at the market, & then working up & down based on the buy & sell orders in front of him. If he can find a match, your order is filled. If he can't, then your order stands by until a matching order comes in, you modify your order, or you cancel your order, or your order expires.

What does the WSJ reflect? It reflects the last transaction, whether it is a buy, OR a sell. Was it an uptick, or a downtick? The reader never knows … but the stock market brokers can tell on their computer screens, and the market maker can tell you if it was a buy or a sell. Why is this important? Simply to point out the simple fact that the "last transaction price" listed in the WSJ is merely that, the last transaction. It could have been the last sale price, but it could also have been the last buy price! The odds are 50/50.

Now, lets take the idea a step further. Lets say the stock is at $50 per share. Why is the buyer looking to buy the stock? Is it for income? Is it for control purposes? Is it just to own one of the companies stock certificates (yes, many people collect stock certificates, so they would buy one share just to get a certificate, eg Playboy)? Is it for the prospect of stock price appreciation? Is it because they "just gotta have it"? Or is it merely for the fun of buying some stock? Look at a brokerage account application … you will probably find the primary purposes for opening a stock brokerage account is to achieve the "investment objectives" of earning a) income, or b) capital gains.

So unless, someone was buying stock just for income purposes, it is unlikely that they thought the stock was "fully valued." If it was "fully valued," then there wouldn't be any capital gains to be earned! In fact, if they thought the stock was overvalued, they would "short" the stock, or simply not buy it.

And the point here is … stock market investors usually buy stocks because they perceive they are buying it at less than they think the stock is worth, or may be worth. The WSJ stock listings truly reflect "last transaction prices" reported on a day to day basis.

How does the stock market investor determine whether a stock has upside potential, or that its worth is greater than its listed price level? Well, in the brokerage industry, there are hordes of stock analysts & others, who chart prices, who analyze companies, who make recommendations as to the buy/sell/hold status of individual stocks. Through this process, a buyer can evaluate an analyst's research report, company announcements, industry data, consumer trends & spending, and develop a list of "stock values" to consider to buy.

What exactly does a stock analyst do, & how does he have more information than the average American? A stock analyst is paid to investigate a company, its markets, its financials, its products, its prospects. The analyst takes into consideration a wide variety of information, and in addition may visit the company & its facilities, and may converse with corporate executives as to what is really happening at the company. Naturally, the company will only tell the analyst what it wants the analyst to know. Therefore the top analysts must do additional homework in order to fully evaluate a company's prospects.

To establish value, an analyst typically will develop a "break up value" for the company and its component divisions and assets. Quite often, a company has assets on its historically stated financials listed at very low costs, or even at zero value. Other times, the analyst must evaluate the value of a company's cash flow from operations. Break up value typically will represent a "best use" going concern fair market value for a company. Nowhere will this be stated on any WSJ or NYSE listing, but this information is often widely available on "the street" and to clients of the brokerage houses.

In essence, the WSJ & NYSE listings merely represent the proverbial "tip of the iceberg" of the information of value of a stock. It is often said that to invest in stocks, one either should be a stock market professional, or should utilize the guidance of professionals. Otherwise, merely relying on the WSJ & NYSE to pick stocks to buy, is very near to buying "blindly."

In the sports card market, we do not have the abundance of information (ala the analysts) from which to evaluate information as to card worth. All we have is the "price guides." Is this enough? Apparently not, if our price guides are intended to be the equivalent of the WSJ & NYSE daily listings.

Already, there are signs that the sports card market is reeling from the inadequacies due to the undue reliance merely upon "price guides." There has been an excessive bliss arising from ignorance of the facts & information which would support & complement the "price guides." Is ignorance bliss? Or will ignorance of the fact there is more to cards than "what's it worth?" do monumental damage to the industry & hobby as it exists today? Until now, all that has happened is the defection of consumers & collectors from the ranks of the hobby, while dealers & distributors (as well as some manufacturers) are losing their shirt trying to maintain the status quo.

It is apparent that "price guides" have tried for too long to fulfill the shoes of "reporting last transaction prices," as well as filling the informational void and confusing the marketplace by simplification of the matter of prices vs. worth. It is time to acknowledge that people are always asking "what's it worth?" Only after they establsih to themselves that the "worth" is greater than the "price," will people buy. "Price guides" can not successfully fill both shoes, that of reporting prices, and that of reporting worth. The two terms are mutually exclusive. Think about it, what does it mean, in the following situation.

Clearly, price guides cannot represent both worth AND price, at the same time. Perhaps, because of this incongruity, the sports card marketplace is now split into multiple camps.

One camp supports price guides … if it is listed for $100, it should sell for $100.

Another camp also supports price guides, except at a discount … if it is listed for $100, it should sell for 10% off to 90% off.

Yet another camp doesn't believe in price guides at all … it doesn't matter if the card lists for $100, my price can be $1, or it can be $250. It is whatever I think it is worth, not some price guides.

Given the above camps, what is the $100 card worth? $1? $10? $50? $90? $100? $250?

Not to pick an argument, but it is clear that regardless of the best intentions of the leading "price guides," the industry & hobby currently cannot agree amongst itself what a single card is worth. If the industry & hobby cannot agree, it is hard to see how without correcting the problem, the industry & hobby will be able to attract NEW consumers & collectors to join in our disorganized ranks. Why would anyone desire to throw their good money in after all the "lost dollars" others have already squandered? Why indeed?

Now is the time to set some direction to this industry & hobby, to regain consumer confidence in a price standard, in a worth standard, to encourage the gathering - sharing - dissemination of information & knowledge & consumer awareness, so that consumers & collectors will have the confidence to put their time & money back into an organized hobby.

It is time to realize that the industry & hobby is clearly teetering & tottering from the status quo of the past, and the past needs to be modified to reflect the modern realities. Fixing this one issue may not "right" the ship all by itself, but it will allow other changes to be implemented on a sound basis. Without a sound base of confidence for the industry & hobby to function from, it will be hard for the powers to be to acknowledge that the industry & hobby is willing to take an active part in acknowledging the ills that persist.

PCN Reports has taken some steps in a positive direction. PCN has editorialized on the "market values" concept, as well as cautioned on interpreting values from auction realizations .. (PCN/3). PCN urges any concerned consumer, collector, dealer, distributor, or any industry representative to consider the issues, & to work together for the good of the industry & hobby we all cherish.